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Bus and Motor Coach Library

Customer Service 101

Author – Brian Niddery (2004)

In this feature we investigate the ways and means in which we can improve the quality of customer service.  In effect we look at the methodology involved in transforming a company's services from one where customers are merely satisfied, or at times perhaps not satisfied, to one in which your services exceed their expectations.

Why do customers switch Companies?

In order to understand why customers switch companies, we first must understand the major reasons why customers switch companies:
- 10% of customers take their business to another company for a Better Price.
- 15% will switch due to Product Quality and/or selection of product
- 25% will be affected by Other Reasons (move away, lifestyle change, etc.)
- 50% of customers switch because of Poor Service

Of the four major factors above you have no control over the 25% of customers whose circumstances have changed (Other Reasons), and therefore are no longer able to use your services?  These include lifestyle changes, new jobs or transfers, moves to other locals.  This is a natural customer turnover in which an active and on-going marketing/promotional effort should replenish.

You also have little control over your pricing schedules.  Your expenses are more or less dictated by your suppliers - fuel, driver wages, insurance, vehicle maintenance, fixed overhead, et cetra.  In addition, one has to build in a reasonable profit margin.  So there is very little latitude available in price flexibility.  In any case the price factor is only 10% of why people switch companies.

You do exercise some control over product quality.  In terms of passenger services your product is the range of destinations, frequency, arrival/departure times, and proper equipment, and in realm of charters, tours and contract services, it is ability to provide the right kind of equipment when and where needed.  The ability, or inability to offer the kind and extent of product that are required by your particular customer base accounts for about 15% of why customers switch.

You exercise the most control over the level of customer service, and this factor accounts for 50% - or fully half of why customers will switch from one company to another.
So this becomes our starting point - in focusing on the factors in which you can exercise the greatest degree of control.  You have some control over product or kind of services offered, and you definitely have a great deal of control over the quality of services you offer.  Between them, these two factors account for 65% or a full two-thirds of why customers will switch from one company to another.   

A short note on pricing...Some readers, particularly those in the charter/tour/contract segments of the business continue to believe that price is all-important, sometimes the key ingredient that makes or breaks a sale.  This may be true for some customers.  However this falls under the old 80/20 rule of business.  20% of customers are price-shoppers - and these are the very same people who usually are most demanding of your time and your resources - they want it all! And they are usually the most difficult to please.  If one has nothing else to sell, then by default price becomes the only selling point, and it follows then that this is the kind of customer base that you will usually attract.  The other 80% are willing to pay a fair price, but only if they have the confidence of knowing that they will receive quality service that effectively meets their needs.

Exceeding Customer Expectations

The key factor is that most customers are willing to pay a fair price, but only if they are sure that their needs will be fully and effectively met, and that service levels will at least meet and hopefully exceed their expectations. 

But how are you going to know what their needs are, and what their expectations are, unless you really get to know who your customers are?  If you are able to get to know who your customers are and better understand more intimately what their needs are, you are likely to find out that although they may need passenger transportation from Point A to Point B, what they really crave and want is something more.  It is a defining level of service that transcends the mere ability to transport people between two points.  It is where in fact the actual passenger service you are providing - your product - becomes almost an afterthought of their customer's experience, and where service quality always seems to exceed all expectations. 

An excellent example of where the level of service can almost transcend that of the actual product is Mr. Fred Smith, who founded FedEx. His fledgling company was but one of hundreds of such companies offering parcel delivery service at the time.  In intimately understanding his customer’s needs, Fred realized that what they really wanted was the assurance that their parcel would arrive on time every time!  He built his business around a service based on more than just a mere parcel delivery service.  He sold an "on-time, every-time" service that was far more than just a parcel delivery service; it was also an information service that allowed his customers to know the status of their parcel deliveries. And many thousands of customers bought into his service, and willingly paid a premium.  In effect parcel delivery, his product, became almost an afterthought of his customer's experience.   

Now the parcel delivery business is not unlike the passenger transportation business.  In both cases it involves a delivery system between two points.  The question then becomes what level of passenger service can be developed that transcends mere passenger service?  What is it that your customers crave or could wish for that might even be more important to them than your product - which is transportation between two points?  If you can correctly identify what these elements are, you can begin to differentiate your service from all the others - and over time you can likely command a premium rate. 

What are some of the things that can differentiate your service from the others?  It may be a level of service where above all else a customer remembers how courteous and professional the driver was, how clean and well-appointed the bus, or how one enjoys the confidence of an "always on time, every time" service, or the convenience of a superior reservations system.  It may include other perks and ancillary services that makes one feel as though they are the most important people in the world, such as complimentary refreshments or newspaper.  Can you build in a customer loyalty or some kind of rewards program?  What about promotional campaigns that can attract both existing and new customers to your service, or networking or coop programs with other companies or local retailers?  And most importantly, are your schedules, destinations, frequency of service meeting the optimum needs of a given customer base?

Getting To Know Your Customers

It is very difficult to really know what your customers crave unless you really understand who your customers are and what they want.  Therefore job one is getting to know your customers - intimately!  You need to get beyond knowing that they need transportation from Point A to Point B.  Anyone can offer that kind of service, and chances are that some of your competitors are already offering that level of service for a bargain-basement price.  Therefore you need to offer something more!

Your goal should be to discover exactly how you could improve your services to that client.  It means adding value in ways that will surprise and astound your clients.  Give them more than they ask, by constantly striving to raise the service level bar.  If you give them more than they ask, they often willingly pay a premium for your service.

How do we do that?  Ask Them!

You have to ask them!  Customer dialogue is the most obvious first step in improving customer service, and yet it happens to be one of the most overlooked aspects of business. 
Unless you really know and understand the needs of your customers, it would be very difficult to develop a service that effectively meets their needs.  Yet so many companies try to do just that.  They launch a new service because they believe that such a service is needed, and are disappointed when customer acceptance is mediocre at best.  Combine that with lackluster levels of service with the predictable result that it becomes "undervalued" in the eyes of potential customers, and often they are unwilling to pay a reasonable price for that service.   

There are essentially two ways to communicate and solicit responses from your customers.  One is through direct contact while the other is by way of a system of customer comment cards.  These are principally the two most proactive methods; however, there are a number of other ways that are more passive in nature, including soliciting customer responses through the Internet.

The Importance of a Customer Follow-Up Program

In the case of charters and tours, or contract services, where you do have opportunity for direct customer contact, an active customer follow-up program should be in place. By simply initiating such a program, you win!  In the customer's eyes you are paying attention, and it conveys the message that as a customer, he or she is indeed a very important person.

A follow-up program should be carried out either by telephone or through a face-to-face meeting.  Avoid any regular mail, fax, or email follow-up, as you do not have the opportunity to elicit detailed responses that can contribute to improving the level of service.

This program should be instituted as a regular company policy that can be tracked and recorded, so that it does not become over time a "hit or miss" proposition.  Procedures should be in place to follow-up with a telephone or direct call upon the completion of every job.

The Importance of Comment Cards

When it comes to regularly scheduled passenger services, you seldom meet individual customers.  They simply purchase their fare, and travel aboard your equipment.  The only contact from your company that they will ever meet is the driver, and the only piece of equipment that they will ever likely experience is that which they are riding on.  This by the way should serve to underline the importance of driver and equipment deportment.  Since there is no opportunity for direct contact, you must do the next best thing - illicit customer response through the use of comment cards.  If nothing else a comment card makes a customer feel important - that you actually respect their opinion.  Just by inviting your customers to comment on your service, you immediately have achieved a higher level of customer service, as they perceive it.  But certainly continue the good work by categorizing and assessing the comments, in an effort to increase your service levels.  Customers are usually happy to help out, and simply eliciting their comments is a big step in the right direction.

What You Need to Know

There are three primary objectives that you should keep in mind when soliciting customer response.
First off we should try to confirm that the services being offered - your product - really are optimally meeting customer needs.  Are the arrival/departure times appropriate?  What is the record of on-time service?  That is, how often (or rarely) is the bus late, or early?  Are the pick-up or drop-off points satisfactory, or can these be improved?  You need to get out the magnifying glass and assess every element of your product to determine in detail any improvements that can be made that will result in a better product that more accurately responds to your customer needs.   

Secondly you need to understand how your customers rate the present quality of your service.  You need to intimately get to know how they feel about the quality of your service, and every individual aspect of your service.  How do they rate the professionalism of your drivers, their dress and deportment, how are your customers greeted, and if assistance or information is required, is it given freely and courteously?  Ask them to rate your bus - its condition, its cleanliness.

Thirdly you need to know whenever a customer is unhappy with your service.  This is far and away the most important element of all.  It carries such a level of importance for a company's long term success that we need to treat it as a separate element on its own.

Customer Dissatisfaction and the Silent Majority

For every customer who complains of poor service, statistics show there are on average nine other customers who are also unhappy with your service, but who don't complain.

And the customer that doesn't complain and doesn't come back is the one who can hurt your business most of all! Human nature being what it is, dissatisfied customers like to tell other people how bad your service is - on average about ten other people each in fact.  And in the story telling, again as human nature will have it, there is often a certain amount of embellishment that goes along with such stories, which can make your company sometimes look real bad. 

For every voiced complaint then, there are nine others that don't complain, but who each tell ten of their friends and acquaintances.  Translated this may total up to 90 people who have negative thoughts about your business, and worse you have no way of knowing these people, nor have any opportunity to respond - very destructive!

Although the one in ten that does complain can sometimes give you a rough time, at least you know who they are, and why they are unhappy!  You have the opportunity to resolve their issues to their satisfaction. 

But if they don't tell you, how on earth can you resolve their complaints?  In a word - you can't!  Doesn't it make a whole lot of sense then to be able to identify those nine other dissatisfied customers so that you have the opportunity to address their issues?  By identifying what those issues are, you can then turn their negative experience into a positive response thereby re-earning their business back.  And as a bonus, they are far less likely to engage in a story-telling situation that can damage your company's reputation even more.  Moreover, a disgruntled customer can sometimes be converted to your most ardent supporter and client, if you have the opportunity to handle their complaint in a positive and immediate fashion.

Your first line of defense therefore is to ask them!  A full-fledged customer response program is vitally important if you wish to become a truly customer service oriented company. The ability to identify customers who have complaints, including the 90% silent majority, and the ability to deal with these complaints in a timely and positive manner, represents a giant leap in the quest to become a truly customer oriented organization.   

The most successful organizations in any field have one common and singular focus - an inordinate obsession with taking care of their customers.  Most companies like to "talk the talk" about the quality of their service, but few are able to "walk the walk"!  For most organizations, customer service is more honored in a sales pitch than it is in actual deed! 

To truly become a "Customer Service" oriented company a transformation must take place.  This transformation begins by listening intently to one's customers, and then allowing them to be the driving force behind change and progression.  In a way it becomes an upside down corporate pyramid, where the customers are at the top, and management is at the bottom.  It is a place where management has the ability to respond effectively to the needs of customers, thus it can truly be defined as an organization that is "customer driven”.

The Importance of Resolving Complaints in a Satisfactory Manner:

-      It's five times more expensive to attract a new customer than it is to retain an old customer
-     75% of customers will continue doing business with you if their complaint is handled in a positive manner
-     95% of customers will continue doing business with you again if their complaints are handled positively and immediately.
-     Most of these will talk positively to their friends and acquaintances, if their complaints are answered to their satisfaction in a timely manner.

The Silent Majority:

 -     90% of customers who are dissatisfied with your service don't complain

 -     90% of these will not do business with you again  l     Each of these will tell an average of 10 other people about your poor service